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Obamacare Enrollment: Too Complicated for Its Own Good?

Open enrollment for Obamacare will kick off in about six weeks, but things may not go as smoothly as you'd expect. Find out what complications could have insurers struggling to add to their enrollment figures from 2014.

Ready or not, annual enrollment in the Affordable Care Act, which most consumers know best as Obamacare, is set to kick off in just a few weeks.

Last year, Obamacare's enrollment shocked both skeptics and optimists by vastly underperforming because of IT-architecture issues during the first two months, then roaring back in a big way in March as procrastinators piled onto the marketplace exchanges. Ultimately, 8.1 million wound up enrolling via state and federally run exchanges, with 7.3 million of those people continued to pay on their health insurance plans through mid-August. In other words, enrollment totals swung from more than 1 million people behind schedule at the end of November, to more than 1 million higher than projections by March's close.

The initial results would suggest that Obamacare has indeed taken steps toward lowering this country's long-term medical cost inflation. However, we could also be on the precipice of taking at least one step back in the opposite direction.

Obamacare's about to get really complicated During Obamacare's second year of enrollment, insurers and the exchanges get to play an interesting balancing act of courting additional uninsured individuals, as well as retaining the 7.3 million actively paying consumers. It sounds fairly easy, but it's actually going to be a significant hurdle to overcome.

To begin with, the enrollment period itself is significantly shorter than it was last year. Open enrollment for Obamacare begins on Nov. 15 this year, more than six weeks later than it did for fiscal 2014 because of mid-term elections. The idea is that consumers would be too focused on voting and following local issues to devote their attention to healthcare, thus the Nov. 15 start date.

Yet, unlike the prior year, enrollment for 2015 will end on Feb. 15, marking just a three-month period during which consumers have to choose a plan. It means insurers are going to have to make their advertising count more than ever, and that ad campaigns will need to be tightly targeted to specific uninsured groups.

Perhaps the most confusing and complicated aspect of Obamacare is going to be the reenrollment process for the 7.3 million paying customers.

The concern with reenrollments is twofold. First, reenrollment is a process that can be different on a state-by-state basis. Federally run Healthcare.gov, which now covers 36 states, two more than last year after Oregon and Nevada scrapped their state-run exchanges in favor of the federally run one, will automatically reenroll more than 5 million people unless they choose to opt out of their plans or choose a different plan. Other states, such as Maryland, as reported by The Wall Street Journal, will require enrollees to go back online to redetermine their eligibility. Similarly, California, the largest contributing state by total enrollment, will require members to revisit the Covered California website to reenroll.

Not having a universal reenrollment process could create confusion about what consumers are expected to do, especially in situations where friends and family members live in states where the reenrollment process differs.

The other concern is that automatic enrollment could wind up angering a number of citizens and may lock them into a plan with a premium that looks nothing like it did in the previous year. Let's face it: The chances are probably decent that a significant number of enrollees will be on autopilot later this year and are unlikely to drop out of their current plan or change to a different plan.

However, as a Kaiser Family Foundation study discovered last month, of the 15 states and one locale (Washington, D.C.) that had reported their final premium data for 2015 as of the beginning of September, 12 had a new bronze plan, the least costly plan offered. In other words, the majority of people who initially enrolled in the lowest-priced plan within their states aren't likely to be enrolled in the lowest-priced plan in 2015. If these individuals are automatically enrolled, it could lead to outrage, especially if they're expecting their premium to remain close to unchanged. Furthermore, a higher premium, as well as subsidy changes, could price select individuals out of the market if they're automatically reenrolled in a plan that's seen a even modest premium increase.

Can insurers meet expectations?Though premium pricing is clearly an obstacle yet to be sorted out in every state, these aforementioned enrollment challenges are going to make life tricky for select insurers.

Source: Covered California.

WellPoint(NYSE:ANTM), which actually saw the biggest enrollment of any national insurer last year thanks to California, will be beefing up all media channels, including direct mailers, television advertising, and online advertising, as well as partnerships with broadcasting networks. Given California's diverse ethnic background, WellPoint understands it'll need to focus its efforts in a way that breaches potential language barriers and make citizens whose first language may not be English feel comfortable applying for health insurance.

Other insurers hope to attract new and existing consumers by utilizing brand image and choice. Forecasts for 2015 expect the number of health insurers on nationwide exchanges to increase by 25%, with UnitedHealth Group(NYSE:UNH) expanding from just four states in 2014 to as many as 24 states in 2015. Because of UnitedHealth's size, its reputation, and the fact that it can be a disruptive force on pricing in states where there are just a handful of insurers, it's possible this additional competition will do more for enrollment than any advertising ever would have.

Additionally, I'd expect eHealth(NASDAQ:EHTH) to again turn to a heavy dose of advertising in order to draw frustrated consumers away from Affordable Care Act exchanges and toward its private platform. eHealth witnessed its membership climb by 14% year over year to 1.25 million as of the second quarter, and there's no reason to believe it can't add another 100,000-plus members in 2015.

Though everything is just speculation on my part as of now, Obamacare remaining a success into 2015 certainly isn't a given.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

Author

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and investment planning. You'll often find him writing about Obamacare, marijuana, drug and device development, Social Security, taxes, retirement issues and general macroeconomic topics of interest. Follow @TMFUltraLong